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SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registranto
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
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3220 Tillman Drive
Suite 300
Bensalem, Pennsylvania 19020
1. | To elect eight directors; | |
2. | To approve an amendment to the Company’s Amended and Restated Articles of Incorporation to increase the aggregate number of shares of capital stock authorized to be issued by the Company from 30,000,000 to 100,000,000; | |
3. | To approve and ratify the selection of Grant Thornton LLP as the independent registered public accounting firm of the Company for its current fiscal year ending December 31, 2007; and | |
4. | To consider and act upon such other business as may properly come before the Meeting and any adjournment or postponement. |
Dated: | Bensalem, Pennsylvania |
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3220 Tillman Drive
Suite 300
Bensalem, Pennsylvania 19020
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Name, Age, Principal Occupations | ||||
for the past five years and Current | Director | |||
Public Directorships or Trusteeships | Since | |||
Daniel P. McCartney, 55, Chief Executive Officer and Chairman of the Board of the Company for more than five years. | 1977 | |||
Barton D. Weisman, 79, Chairman of the Board of NuVision Management, LLC (successor company to H.B.A. Corporation and H.B.A. Management, Inc.) since 2002; President and Chief Executive Officer of several affiliated companies, which ownand/or manage nursing homes, for more than five years. | 1983 | (2) | ||
Joseph F. McCartney, 52, Divisional Vice President of the Company for more than five years; brother of Daniel P. McCartney. | 1983 | |||
Robert L. Frome, Esq., 69, Member of the law firm of Olshan Grundman Frome Rosenzweig & Wolosky LLP for more than five years; Director of NuCo2, Inc., Continuum Group A, Inc. and Horizon Wimba, Inc. | 1983 | |||
Thomas A. Cook, 61, President and Chief Operating Officer of the Company for more than five years. | 1987 | |||
Robert J. Moss, Esq., 69, Court Officer of First Judicial District of Pennsylvania since 2006. President of Moss Associates, a law firm, for more than four years. | 1992 | (1)(2) | ||
John M. Briggs, CPA, 56, Treasurer, Philadelphia Affiliate of The Susan G. Komen Breast Cancer Foundation since February, 2005; formerly Partner of Briggs, Bunting & Dougherty, LLP, a registered public accounting firm for more than five years. Board member of the Capstone Group of Regulated Investment Funds. | 1993 | (1)(2) | ||
Dino D. Ottaviano, 59, Principal of D20 Marketing, Inc., a provider of internet productivity tools founded in 2006. Previously employed for 23 years with Transcontinental Direct (successor to Communication Concepts, Inc.), a publicly held outsourcing printer, retiring in 2002 as Vice President of Business Development. | N/A |
(1) | Member of Nominating, Compensation and Stock Option Committee. | |
(2) | Member of Audit Committee. |
Name, Age, Principal Occupations | ||||
for the past five years and Current | ||||
Public Directorships or Trusteeships | ||||
James L. DiStefano, 62, Chief Financial Officer and Treasurer for more than five years.* | ||||
Richard W. Hudson, 59, Vice President of Finance and Secretary for more than five years.* |
* | Upon Mr. DiStefano’s retirement on March 31, 2007, Mr. Hudson became Chief Financial Officer. Mr. DiStefano will provide consulting services to the Company subsequent to his retirement on a limited basis. |
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Amount and | ||||||||
Nature of | Percent | |||||||
Beneficial | of | |||||||
Name and Beneficial Owner or Group(1)(2) | Ownership | Class(3) | ||||||
Advisory Research Inc. | 2,439,877 | (4) | 8.8 | % | ||||
Daniel P. McCartney | 2,395,321 | (5) | 8.5 | % | ||||
Pequot Capital Management, Inc. | 1,666,800 | (6) | 6.0 | % | ||||
Wells Capital Management Incorporated | 1,965,079 | (7) | 7.1 | % | ||||
Thomas A. Cook | 576,733 | (8) | 2.0 | % | ||||
Barton D. Weisman | 246,685 | (9) | (17 | ) | ||||
James L. DiStefano | 109,021 | (10) | (17 | ) | ||||
Joseph F. McCartney | 103,918 | (11) | (17 | ) | ||||
John M. Briggs | 55,026 | (12) | (17 | ) | ||||
Robert L. Frome | 60,251 | (13) | (17 | ) | ||||
Robert J. Moss | 49,637 | (14) | (17 | ) | ||||
Richard W. Hudson | 40,842 | (15) | (17 | ) | ||||
Dino M. Ottaviano | 0 | — | ||||||
Directors and Executive Officers as a group (9 persons) | 3,637,434 | (16) | 12.5 | % |
(1) | The address of all persons is c/o Healthcare Services Group, Inc., 3220 Tillman Drive, Suite 300, Bensalem, PA 19020. | |
(2) | The address of Pequot Capital Management, Inc. is 500 Nyala Farm Road, Westport, CT 06880. |
(3) | Based on 27,691,000 shares of Common Stock outstanding at the Record Date. | |
(4) | According to a Schedule 13G filed by Advisory Research Inc. dated February 20, 2007, it has sole dispositive power and sole voting power with respect to the 2,439,877 shares. | |
(5) | Includes incentive stock options to purchase 90,795 shares and nonqualified stock options to purchase 422,221 shares all currently exercisable, and 23,470 shares credited to Mr. McCartney’s account (but unissued) in connection with the Company’s Deferred Compensation Plan; also includes an aggregate of 33,601 shares held by Mr. McCartney’s adult child who shares Mr. McCartney’s household. Mr. McCartney disclaims beneficial ownership of these shares. Mr. McCartney may be deemed to be a “parent” of and deemed to control the Company, as such terms are defined for purposes of the Securities Act of 1933, as amended, by virtue of his position as founder, director, Chief Executive Officer and a principal shareholder of the Company. | |
(6) | According to a Schedule 13G filed by Pequot Capital Management, Inc. dated February 14, 2007, it has sole dispositive power and sole voting power with respect to the 1,666,800 shares. | |
(7) | According to a Schedule 13G filed by Wells Fargo & Company dated February 6, 2007, it and Wells Capital Management Incorporated, Wells Fargo Funds Management, LLC and Wells Fargo Bank, National Association have, in the aggregate, beneficial ownership of 1,965,079 shares. | |
(8) | Includes incentive stock options to purchase 120,024 shares and nonqualified stock options to purchase 420,609 shares all currently exercisable, and 16,852 shares credited to Mr. Cook’s account (but unissued) in connection with the Company’s Deferred Compensation Plan. |
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(9) | Includes nonqualified stock options to purchase 79,843 shares, all currently exercisable; also includes 87,299 shares that Mr. Weisman holds in a trust of which he and his wife serve as trustees. Mr. Weisman disclaims beneficial ownership of the shares held in trust. | |
(10) | Includes incentive stock options to purchase 71,258 shares and nonqualified stock options to purchase 28,003 shares, all currently exercisable, and 5,741 shares credited to Mr. DiStefano’s account (but unissued) in connection with the Company’s Deferred Compensation Plan. | |
(11) | Includes incentive stock options to purchase 39,499 shares and nonqualified stock options to purchase 28,003 shares, all currently exercisable, 4,688 shares credited to Mr. McCartney’s account (but unissued) in connection with the Company’s Deferred Compensation Plan and 1,920 shares held by Mr. McCartney’s minor child. | |
(12) | Includes nonqualified stock options to purchase 26,604 shares, all currently exercisable. | |
(13) | Includes nonqualified stock options to purchase 53,501 shares, all currently exercisable. | |
(14) | Represents nonqualified stock options to purchase 49,637 shares, all currently exercisable. | |
(15) | Includes incentive stock options to purchase 21,604 shares and nonqualified stock options to purchase 12,849 shares, all currently exercisable, and 1,111 shares credited to Mr. Hudson’s account (but unissued) in connection with the Company’s Deferred Compensation Plan. | |
(16) | Includes 1,464,450 shares underlying options granted to this group. All options are currently exercisable; also includes 51,862 shares credited to the accounts of certain executive officers (but unissued) in connection with the Company’s Deferred Compensation Plan. | |
(17) | Less than 1% of the outstanding shares. |
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• | Attract and retain individuals of superior ability and managerial talent; | |
• | Ensure officer compensation is aligned with our corporate strategies, business objectives and the long-term interests of our shareholders; and | |
• | Enhance the officers’ incentive to increase our stock price and maximize shareholder value, as well as promote retention of key people, by providing a portion of total compensation for management in the form of direct ownership in us through stock options and other compensatory stock-based plans. |
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• | Consideration of the operating and financial performance of the Company, primarily its income before income taxes during the preceding fiscal year, as compared with prior operating periods; | |
• | Attainment of a level of compensation designed to retain a superior executive in a highly competitive environment; and | |
• | Consideration of the individual’s overall contribution to the Company. |
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Nonqualified | ||||||||||||||||||||||||||||
Deferred | All Other | |||||||||||||||||||||||||||
Salary | Bonus | Stock | Compensation | Compensation | ||||||||||||||||||||||||
Name and Principal Position(a) | Year(b) | ($)(c) | ($)(d) | Awards ($)(e) | Earnings ($)(h) | ($)(i) | Total ($)(j) | |||||||||||||||||||||
Daniel P. McCartney | 2006 | $ | 998,941 | (1) | 0 | 0 | $ | 37,474 | $ | 18,705 | (2) | $ | 1,055,120 | |||||||||||||||
Chairman of the | ||||||||||||||||||||||||||||
Board and Chief | ||||||||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||
Thomas A. Cook | 2006 | $ | 998,070 | (1) | 0 | $ | 15,368 | $ | 37,474 | $ | 23,556 | (2) | $ | 1,074,468 | ||||||||||||||
President, Chief | ||||||||||||||||||||||||||||
Operating Officer | ||||||||||||||||||||||||||||
and Director | ||||||||||||||||||||||||||||
James L. DiStefano | 2006 | $ | 213,400 | 0 | $ | 3,202 | $ | 8,022 | $ | 4,172 | (2) | $ | 228,796 | |||||||||||||||
Chief Financial | ||||||||||||||||||||||||||||
Officer and | ||||||||||||||||||||||||||||
Treasurer | ||||||||||||||||||||||||||||
Richard W. Hudson | 2006 | $ | 207,900 | 0 | 0 | $ | 7,819 | $ | 4,172 | (2) | $ | 219,891 | ||||||||||||||||
Vice President | ||||||||||||||||||||||||||||
Finance and | ||||||||||||||||||||||||||||
Secretary | ||||||||||||||||||||||||||||
Joseph F. McCartney | 2006 | $ | 90,090 | $ | 51,300 | $ | 8,004 | $ | 5,329 | $ | 28,923 | (3) | $ | 183,646 | ||||||||||||||
Division Vice | ||||||||||||||||||||||||||||
President and | ||||||||||||||||||||||||||||
Director |
(1) | Represents a base salary of $75,000 and 3.0% of 2005 reported income before income taxes ($30,799,000), all of which was paid in 2006. | |
(2) | Includes automobile allowance, health insurance premiums paid by the Company and personal use of tickets for sports events. | |
(3) | Includes health insurance premiums paid by the Company of $20,223 and automobile allowance. |
Estimated Future Payouts Under Non- Equity Incentive Plan Awards | ||||||||||||
Name(a) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | |||||||||
Joseph F. McCartney | (1 | ) | (1 | ) | $ | 84,000 |
(1) | Mr. Joseph McCartney earns performance-based compensation based on the achievement of stated financial goals and non-financial measures consistent with the Company’s policies applicable to all divisional managers. He may earn such bonus on a total or pro-rata basis dependent on at which level he achieves the stated financial and non-financial goals. The Company has not provided a dollar-value Threshold or Target since, as previously stated, some required goals are not quantifiable in profit dollars. |
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Option Awards | ||||||||||||
Number of | ||||||||||||
Securities | ||||||||||||
Underlying | ||||||||||||
Unexercised | Option | |||||||||||
Options (#) | Exercise | Option | ||||||||||
Exercisable | Price | Expiration | ||||||||||
Name(a) | (b)(1) | ($)(e) | Date(f) | |||||||||
Daniel P. McCartney | 57,698 | $ | 3.7467 | 08-21-07 | ||||||||
26,681 | $ | 3.7467 | 08-21-07 | |||||||||
31,829 | $ | 4.0945 | 12-04-08 | |||||||||
15,857 | $ | 2.2502 | 12-06-10 | |||||||||
90,387 | $ | 4.1111 | 12-04-11 | |||||||||
4,828 | $ | 20.7100 | 12-30-10 | |||||||||
20,172 | $ | 20.7100 | 12-30-10 | |||||||||
30,177 | $ | 13.6533 | 12-27-14 | |||||||||
7,323 | $ | 13.6533 | 12-27-14 | |||||||||
12,063 | $ | 8.2889 | 12-26-13 | |||||||||
44,189 | $ | 8.2889 | 12-26-13 | |||||||||
17,787 | $ | 5.6222 | 12-13-12 | |||||||||
38,465 | $ | 5.6222 | 12-13-12 | |||||||||
22,113 | $ | 4.5222 | 12-04-11 | |||||||||
93,447 | $ | 3.3000 | 12-16-09 | |||||||||
Thomas A. Cook | 44,441 | $ | 2.2502 | 12-06-10 | ||||||||
11,811 | $ | 2.2502 | 12-06-10 | |||||||||
33,582 | $ | 2.9778 | 05-10-11 | |||||||||
225,000 | $ | 4.1111 | 12-04-11 | |||||||||
17,787 | $ | 5.6222 | 12-13-12 | |||||||||
20,172 | $ | 20.7100 | 12-30-10 | |||||||||
4,828 | $ | 20.7100 | 12-30-10 | |||||||||
30,177 | $ | 13.6533 | 12-27-14 | |||||||||
7,323 | $ | 13.6533 | 12-27-14 | |||||||||
44,189 | $ | 8.2889 | 12-26-13 | |||||||||
12,063 | $ | 8.2889 | 12-26-13 | |||||||||
38,465 | $ | 5.6222 | 12-13-12 | |||||||||
50,795 | $ | 2.9778 | 05-10-11 | |||||||||
James L. DiStefano | 22,500 | $ | 4.1111 | 12-04-11 | ||||||||
6,757 | $ | 2.2502 | 12-06-10 | |||||||||
4,715 | $ | 5.6222 | 12-13-12 | |||||||||
10,439 | $ | 8.2889 | 12-26-13 | |||||||||
7,323 | $ | 13.6533 | 12-27-14 | |||||||||
5,172 | $ | 20.7100 | 12-30-10 | |||||||||
4,828 | $ | 20.7100 | 12-30-10 | |||||||||
7,677 | $ | 13.6533 | 12-27-14 | |||||||||
12,063 | $ | 8.2889 | 12-26-13 | |||||||||
17,787 | $ | 5.6222 | 12-13-12 |
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Option Awards | ||||||||||||
Number of | ||||||||||||
Securities | ||||||||||||
Underlying | ||||||||||||
Unexercised | Option | |||||||||||
Options (#) | Exercise | Option | ||||||||||
Exercisable | Price | Expiration | ||||||||||
Name(a) | (b)(1) | ($)(e) | Date(f) | |||||||||
Richard W. Hudson | 7,323 | $ | 13.6533 | 12-27-14 | ||||||||
7,677 | $ | 13.6533 | 12-27-14 | |||||||||
4,828 | $ | 20.7100 | 12-30-10 | |||||||||
9,453 | $ | 8.2889 | 12-26-13 | |||||||||
5,172 | $ | 20.7100 | 12-30-10 | |||||||||
Joseph F. McCartney | 4,715 | $ | 5.6222 | 12-13-12 | ||||||||
15,285 | $ | 5.6222 | 12-13-12 | |||||||||
10,439 | $ | 8.2889 | 12-26-13 | |||||||||
12,063 | $ | 8.2889 | 12-26-13 | |||||||||
7,677 | $ | 13.6533 | 12-27-14 | |||||||||
5,172 | $ | 20.7100 | 12-30-10 | |||||||||
4,828 | $ | 20.7100 | 12-30-10 | |||||||||
7,323 | $ | 13.6533 | 12-27-14 |
(1) | All options were fully vested on December 31, 2006. |
Option Awards | ||||||||
Number of Shares | Value Realized | |||||||
Acquired on Exercise | on Exercise | |||||||
(#) | ($) | |||||||
Name(a) | (b) | (c) | ||||||
Joseph F. McCartney | 25,003 | $ | 432,451 |
Aggregate | ||||||||||||||||
Executive | Registrant | Aggregate | Balance | |||||||||||||
Contributions | Contributions | Earnings | at Last | |||||||||||||
in Last FY | in Last FY | in Last FY | FYE | |||||||||||||
Name(a) | ($)(b) | ($)(c) | ($)(d) | ($)(f) | ||||||||||||
Daniel P. McCartney | 149,726 | 37,474 | 318,585 | 1,635,722 | ||||||||||||
Thomas A. Cook | 149,726 | 37,474 | 207,730 | 1,270,669 | ||||||||||||
James L. DiStefano | 32,539 | 8,022 | 65,462 | 370,769 | ||||||||||||
Richard W. Hudson | 31,133 | 7,819 | 13,624 | 114,078 | ||||||||||||
Joseph F. McCartney | 21,519 | 5,329 | 56,493 | 303,863 |
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Fees Earned or | ||||||||
Paid in Cash | Total | |||||||
Name(a) | ($)(b) | ($)(j) | ||||||
Barton D. Weisman(1) | $ | 5,500 | $ | 5,500 | ||||
John M. Briggs(2) | $ | 41,500 | $ | 41,500 | ||||
Robert L. Frome(3) | $ | 15,000 | $ | 15,000 | ||||
Robert J. Moss(4) | $ | 3,000 | $ | 3,000 |
(1) | Mr. Weisman had options to purchase 79,843 shares of common stock outstanding as of December 31, 2006. | |
(2) | Mr. Briggs had options to purchase 32,404 shares of common stock outstanding as of December 31, 2006. | |
(3) | Mr. Frome had options to purchase 53,501 shares of common stock outstanding as of December 31, 2006. | |
(4) | Mr. Moss had options to purchase 49,637 shares of common stock outstanding as of December 31, 2006. |
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• | Consideration of the operating and financial performance of the Company, primarily its income before income taxes during the preceding fiscal year, as compared with prior operating periods; | |
• | Attainment of a level of compensation designed to retain a superior executive in a highly competitive environment; and | |
• | Consideration of the individual’s overall contribution to the Company. |
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Dated: | Bensalem, Pennsylvania |
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THE NOMINATING, COMPENSATION AND STOCK OPTION COMMITTEE
OF HEALTHCARE SERVICES GROUP, INC.
A. | Purpose |
B. | Organization |
C. | Meetings |
D. | Responsibilities |
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E. | Committee Resources |
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For discussion purposes only | DRAFT |
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AT THE RADISSON HOTEL OF BUCKS COUNTY,
2400 OLD LINCOLN HIGHWAY, TREVOSE, PA 19047 ON MAY 22, 2007 AT 10:00 A.M.
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For discussion purposes only | DRAFT |
your proxy card in the
envelope provided as soon
as possible.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREþ
1. o o o | To elect eight directors. FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) | O Daniel P. McCartney O Barton D. Weisman O Joseph F. McCartney O Robert L. Frome O Thomas A. Cook O Robert J. Moss O John M. Briggs O Dino M. Ottaviano | 2. To approve an amendment to the Company’s Amended Restated Articles of Incorporation to increase the aggregate number of shares of capital stock authorized to be issued by the Company from 30,000,000 to 100,000,000. | FOR AGAINST ABSTAIN | o o o | |||||||
3. | To approve and ratify the selection of Grant Thornton LLP as the independent registered public accounting nominees: firm of the company for its current fiscal year ending December 31, 2007. | FOR AGAINST ABSTAIN | o o o | 4. To consider and act upon such other business as may properly come before the meeting and any adjournment or postponement. | FOR AGAINST ABSTAIN | o o o |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: O | |||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.o |
Date:
NOTE: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |